Virginia retail group asks governor to slow down efforts to privatize liquor sales

The Virginia Retail Federation, which represents 3,000 retailers and small businesses across the state, wants the state’s watchdog agency to conduct an independent review on any final plan to privatize state-run liquor stores.

In a letter delivered to the office of Gov. Bob McDonnell today, the Virginia Retail Federation and the Virginia Petroleum Convenience and Grocery Association, said the private sector may be the best solution to ABC retailing. In fact, the letter points out that the groups’ members represent the vast majority of existing ABC off-premises licensees.

“However, before supporting any special session on this issue, we would respectfully request that the final plan be examined in a formal report by JLARC (Joint Legislative Audit and Review Commission). Our organizations believe that this examination is crucial for two reasons — to determine how privatization would impact future state revenue and to assure that it would not provide economic advantage to one industry segment over another. “

The Virginia Retail Federation is the advocacy arm of the Retail Alliance in Hampton Roads and the Retail Merchants Association in Richmond. Susan Milhoan, president and CEO of the Retail Alliance, said in an interview that if most of the licenses were auctioned off to large, big-box retailers, they would be in a better position to sell spirits at a discount compared to smaller retail businesses. “It could pit small vs. large businesses. We don’t see the value of doing this quickly.”

The governor is holding town-hall meetings across the state this month to talk with people about government reforms, including his proposal to privatize the state’s 332 liquor stores. The Governor’s Commission on Government Reform and Restructuring is scheduled to meet in Richmond on Sept. 13. There has been discussion about the governor holding a special session to address the issue in October or November. A change in the state’s 76-year-old liquor monopoly would require General Assembly approval.

McDonnell has pushed for the change as a way of coming up with a one-time $300 to $500 million cash infusion (through the auction of licenses) for the state’s aging transportation network.

According to the federation, the retail industry has been the largest private employer in Virginia for the past 10 years. The group also is lobbying for a change in the state’s business, professional and occupational license taxes (BPOL). It recently commissioned Chumura Economics to conduct a study that offers suggestions on modifying the existing structure.